Bottom line:  USDCHF counter trend rally from 0.9613 seems to be complete around 0.9850/60 levels. Bears should be poised to resume lower from here against 1.0023 resistance.

Technical Analysis:

USDCHF intermediary uptrend looks to be complete or close to termination around 0.9850/60 levels. The single currency has retraced close to 61.8% of the previous drop between 1.0023 towards 0.9630 levels respectively. We have re-adjusted the counts here according to price action unfolding since 0.9630 lows. The short term counts since 0.9630 levels indicate a 3 wave corrective rally towards 0.9850 levels. It seems the counter trend is complete and potential Wave 2 could be in place at 0.9850. If the above count is correct, we could witness a sharp decline from current levels, dragging prices below 0.9500 going forward, as Wave 3 progresses. Looking at the larger picture, USDCHF seems to be unfolding Wave (3) of one higher degree since 1.0237 highs print April 26, 2019. The drop between 1.0237 and 0.9659 was an impulse labelled as Wave (1), followed by a corrective rally towards 1.0027, labelled as Wave (2). Since then, Wave (3) has been underway and its lower degree Waves 1 and 2 also seem to be in place at 0.9630 and 0.9850 respectively. A high potential trade setup could be unfolding lower as most traders might be willing to initiate short positions from current price action (0.9850/60), with protective stop at 1.0023 and potential targets below 0.9500 respectively. Please be prepared for Wave 2 to potentially terminate around 0.9860/70, which is Fibonacci 0.618 retracement of the earlier drop. A break below 0.9796 would be confirming a bearish reversal and USDCHF should print lower lows and lower highs going forward. Only a break above 1.0023 would change the structure to bullish and would require re-labelling.

Prepared by

Harsh Japee, Technical Analyst.

USDCHF Chart

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